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Furnished holiday lettings fail in claim for IHT relief

The possibility of tax savings on holiday lettings has fallen following a recent tax case (HMRC v Pawson [2013] UKUT 050 (TCC)).

The tribunal determined that inheritance tax business property relief should not be available in relation to the estate’s furnished holiday let property.

The decision held that only at the far end of the spectrum of possible letting businesses will the business also involve the provision of services so extensive as to override the investment element.  In any standard case, even an actively managed property letting business, would be considered as an ‘investment’ business; and furnished holiday lettings should not be given any special treatment.

This is clearly bad news for the owners of furnished holiday lettings because the implication is that very few of them will qualify for IHT relief.



Date: 25th February, 2013
Author: Cathy Corns


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